If you have
ever traveled abroad or have been gifted foreign currency from friends or
family, then you must be quite familiar with exchanging the currency for your
local currency. Forex Trading, also known as foreign exchange, is the
process of transferring currency between two interested parties at an agreed
price. Currency exchange is important for conducting foreign trading and
business.
Forex
Education is
important for investors interested in Forex Trading. Before Forex Trading,
it is important to understand the core concepts and knowledge area to
understand how forex trading works. It also helps to apply knowledge to focus
areas to carry out important trading activities. Forex Education
provides helpful information for traders to apply optimal solutions. With solid
information about Forex Trading, traders can easily apply the knowledge
as well as tips and tricks received from Forex Education.
Basic Terms to Know in Forex
Trading
1. Pip
In the world
of forex trading, PIP stands for ‘Percentage in Point’ which stands for measure
of exchange rate movement. A PIP is a single float value that measures the
profit and loss. A single PiP value equals 0.0001.
2. Spread
A spread is
the difference between the pip value of the asking price of an asset. It is
important for a forex trader to understand what a spread is. To calculate the
spread value, calculate the difference between the buying and selling price.
3. Leverage
Leverage is
the amount of loan allowed to traders to access larger sums of trading
capitals. This loan amount is also called margins. Leverage is very important
as it can increase or decrease the profits and losses therefore, leverage
should be considered wisely.
4. Margins
Margin is
referred to as minimum amount of collateral or deposit that a trader has while
trading. It is a required amount that is needed for trading. The leverage ratio
determines the amount of margin that is needed for a trade.
5. Volume
There are
two types of volume values used in forex trading. First is the volume with
respect to order which refers to the volumes of buying and selling. The second
volume refers to the tick volumes where it counts the times the volume has
changed over a specific period.
6. Slippage
Slippage refers
to a slight difference in the price you expect and the execution price. This
can occur through market volatility and execution speeds.
There are a
number of courses, MOOCs and masterclasses available over the internet to
understand how Forex Trading works and which allows the traders to learn the
tips and tricks of forex trading. One of the best platform for forex education
is
In
conclusion, there are lots of other fsorex education material available over
the internet for aspiring traders to study and understand the meaning of forex
education and what are the best practices to apply when stepping into the world
of trading.
